N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT M AR IA DE LOS ANGELES GOM EZ; JUAN ELIAS GOM EZ; VAC HIK Y. ALVANDI; DOUGLAS ALAN MARKS; SHAR ON M A UREEN M ARKS; EVELIN YANETH R

AFT; R OB ER TA B AR TEC K; R ONALD B AR TEC K; FRED SHOKOUFI; LEESHA TAN KELLER ; TADEH KESHM ESHIAN; IDET KESHM ESHIAN; C ELAR IS ZADORIAN; HER

AYR ZAHR AB I; SHAR ON REUVENI, AKA Sha wn R e uve ni; R

E UVENI REUVENI; DAVID VALENTINO, Plaintiffs - Appe lla nts, v. B ANK OF AM E R IC A, N.A., a Unite d State s c orporation for itse lf a nd a s suc c e s sor in inte re s t for C ountry wide B a nk FSB ; C OUNTR

YW IDE HOM E LOANS INC , a Ne w York c orporation, DB A Am e ric a ’ s Whole sa le Le n de r; JOHN PARK, De fe nda

nts - Appe lle e s. No. 14-55129 D .C . No. 2:12-c v-08704-GHK-SH M EM O R ANDUM * 

# FIL ED

MAR 02 2016 M OLLY C. DW Y ER, CLERK U . S . CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3.Appe a l from the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia Ge orge H. King, C hie f Distric t Judge , Pre siding Subm itte d Fe brua

ry 10, 2016 * * Pa sa de n a , C a l ifornia B e fore : KLEINFELD, M c KEOW N, a nd IKUTA, C irc uit Judge s . Pla intiffs sue d

B ank of Am e ric a , N.A., suc c e ssor in intere st to C ountry wide B ank, FSB , form e rly known a s C ountry wide B a nk N.A., C ountry

w ide Hom e Loa ns, Inc . (the “ B ank De fe nda nts” ), an d se ve ra l individual de fe nda nts, a l le ging c ivil lia bility for viola tions of R IC O, 18 U.S.C . § 1962(a )–(d), a s we l l a s se v e ra l sta te c a use s of a c tion. The ir c la im s a re ba se d on da

m a ge s Pla intiffs suffe re d

whe n the y lost a gre at de a l of m one y

in a Ponz i sc he m e ope ra te d by Kave h Va

he di— a pe rsona l frie nd to m any

of the Pla intiffs, a

nd a c on-m a n who prom i se d e xc e lle nt inve stm e nt opportunitie s be fore ta king Pla i ntiffs’ m one y . Afte r giving Pla intiffs an opportunity to a

m e nd the ir c om

pla i nt, the distric t c ourt dismisse d the ir R IC O c la im s a ga inst the B ank De fe n da nts with pre

judic e for fa ilure to sta

te a c la im . Pla i ntiffs a

ppe a l the distric t c ourt’ s Fe de ra l R ule of C i vil Proc e d

ure 12(b)(6) dism issa l a

n d its de n i a l of le ave to a

m e nd the ir R IC O c la im s a ga i nst the B ank De fe nda nts. W e have jurisdic tion pursua nt to 28 U.S.C . § 1291, a

nd we a ffirm .

** The pa

ne l una nim ously c onc lude s this c a se is suita ble for de c ision without ora l a

rgum e nt. Se e Fe d. R . App. P. 34(a )(2). 2De spite the injustic e done to the m by Va he di, the y do not sta

te a R IC O c la im

upon whic h re lie f c an be grante d a g a inst theB a nk De fe nda

nts.

W e re vie w de novo thedistric t c ourt’ s judgm e nt gra nting them o tion to dism iss, Ec le c tic Props. E., LLC v. M arc us & M illc ha p C o., 751 F.3d 990, 995 (9th C ir. 2014), a

n d we re v i e w its de nia l of le ave to a m e nd for a

n a buse of disc re tion. Unite d State s v. C orinthia n C olls., 655 F.3d 984, 995 (9th C ir. 2011). Though we c onstrue the fa c ts in the c om pla int in the

light m ost fa

vora ble to Pla i ntiffs, to survive

a m otion to dism

iss unde r R

ule 12(b)(6), Pla intiffs’ c om pla int m ust to se t forth “ m ore tha

n la be ls a nd c onc lusions, a

n d a form u la ic re c ita

tion of the e le m e nts of a

c a use of a c t ion will not do.” B e ll Atla

ntic C orp. v. Twom

bly , 550 U.S. 544, 555 (2007). In orde r to susta in the ir c la im s, Pla intiffs’ fa c tua l a lle gations m

ust “ sta te a c l a im to re lie f that is pla

usible on its fa c e .” Id. at 570. R IC O c la im s a

re subje c t to both Fe de ra l R ule of C i vil Proc e dure 8(a )’ s re quire m e nt of a

short a nd pla in sta

te m e nt, a nd Fe de ra l R

ule of C ivil Proc e dure 9(b)’ s he ighte ne d ple a d ing re quire m e nt, so Pla intiffs’ c om pla int m ust c onta in a de quate fa c tua l a l l e gations to pla usibly infe r that the B a

nk De fe nda nts, not just Vahe di, spe c ific a l ly

inte nde d to de fraud the m . Ec le c tic Props., 751 F.3d a t 3993–94. Additiona lly , a ny c la im a sse rte d unde r 18 U.S.C . § 1964(c ), whic h pe rm its pe rsons injure d by viola tions of § 1962 to sue for c ivil re m e die s, is only c ogniz a ble if the de fe nda

n t’ s a lle ge d viola

tion proxim ate ly

c a use d the pla intiffs injury . Anz a

v. Ide a l Ste e l Supply

C orp., 547 U.S. 451, 461–62 (2006); se e a lso R e z ne r v. B ay e risc he Hy

po Und Ve re insba

nk AG, 630 F.3d 866, 873 (9th C ir. 2010) (holding tha

t in orde r to sta

te a c la im unde r § 1962(c ), the pla intiffs m ust show tha t the de fe nda

nts’ a c tions we re both a

but-for a n d proxim ate c a

use of the i r injurie s).

Pla intiffs la c k sta

nding to sue

the B ank De fe nda

nts unde r § 1964. To ha

ve sta nding, Pla intiffs m

ust ple a d (1) tha

t the ir a lle ge d ha

rm qua lifie s a s injury

to the ir busine ss or prope rty ; a

n d (2) tha t the ir ha rm wa s “ by

re a son of” the R IC O viola tion, whic h re quire s Pla intiffs to e sta blish proximate c a

usation. C any o n C ty . v. Sy nge nta Se e ds, Inc . , 519 F.3d 969, 972 (9th C ir. 2008).

Pla intiffs c la im

tha t the B ank De fe nda

nts c a u se d the ir losse s in Va

he di’ s Ponz i sc he m e be c a

use C ountry

w ide Hom e Loa

ns de sc ribe d

KGV Inve stm e n ts, Inc . , Va he di’ s c o m

pa ny tha t ope ra te d a s a

lic e nse d m ortga ge broke r, a s one of 30,000 “ c are fully

sc re e ne d” and “ c a

re fully se l e c te d” nat ionwide “ busine ss 4pa

rtne rs.” This, in turn, a

lle ge d ly gave Va he di the a ura of c re dibility

Pla intiffs ne e de d to trust him . The se a l le gations do not c onne c t the a lle g e d ra c k e t e e ring a c tivitie s of the B ank De fe nda nts, i.e ., m a i l fra

ud a nd wire fra

ud for se nding fa lse inform at ion indic ating tha t KGV ha d be e n

“ c are fully

sc re e ne d” an d “ c are fully se le c te d,” with Pla intiffs’ de c isions to ta ke out loa ns a nd inve st m one y

with Vahe di. The am e n de d c o m pla i nt m ake s c le ar that Va he di ha d Pla intiffs’ trust, a n d a s a re sult Pla intiffs put the ir m one y , som e obta i ne d through loa n s a nd som e not borrowe d from

the B ank De fe nda

nts, into Va

he di’ s Ponz i sc he m e and subse q ue ntly lost tha

t m o n e y . Pla intiffs c annot ove rc om e the ir c a usation proble m with re fe re nc e s to fiduc ia ry dutie s a nd a ge nc y

lia bility . Pla intiffs ha

ve not ple a de d fa c ts suffic ie nt to show tha t the B ank De fe nda

n ts owe d the m

a fiduc ia ry duty . “ U nde r C a lifornia

la w, a le nde r doe s not owe a borrowe r or third pa

rty any dutie s be y ond thosee xpre sse d in the loa n a gre e m e nt, e xc e pt[] those im

pose d due to spe c ia l c irc um sta nc e .” R e solution Trust C o rp. v. B VS De v., 42 F.3d 1206, 1214 (9th C ir. 1994) (c iting Ny m a rk v. He art Fe d. Sav. & Loa n Ass’ n., 283 C a l. R

ptr. 53, 56–57 (C a l . C t . App. 1991)). Spe c ia l c irc um s ta nc e s inc lude whe re a le nde r a c t ive ly pa rtic ipate s in the fina

nc e d e nte rprise , a c ting be y ond the sc ope of its “ c onve ntiona l role a s a m e re le nde r of 5m one y .” Nym ark, 283 C a l. R ptr. a t 56 (c iting W a gne r v. B e nson, 161 C a l. R ptr. 516, 521 (C a l. C t. App. 1980)). None of Pla i ntiffs’ a l le gations sugge ste d tha t the B ank De fe nda

nts we re pa

rtic i pating in the fina

nc e d e n te rprise

—

the B a nk De fe nda nts ha d no owne rship inte re st in Va he di’ s c om

pa nie s , a nd we re not solic iting Pla intiffs to inve st in the ir own inve stm e nts. And Plai ntiffs c ite no fa c t for the proposition tha

t se lling bundle s of m ortga ge s to W a ll Stre e t inve stors wa s aty pic a l a c tivity

for institutions like

the B ank De fe nda

nts, or ha d a

nyt hing to do with Va he di ste a ling the ir m one y . Pla intiffs’ a ge n c y

the ory doe s not c onne c t the B ank De fe nda nts with the ir fina nc ia l losse s . Eve n if Va

he d i we re a

dua l a g e nt unde r C a lifornia la wby virtue of the loa n a pplic ation m ate ria ls C ountry wide Hom e Loa

n s se nt out to some of the Pla i ntiffs a fte r the y

a pplie d for hom e loa

ns, the B ank De fe nda

nts c ould only

be lia ble to Pla intiffs for Va

he di’ s a c tions donewithin the sc ope of his a ge n c y , a

nd only for a c tions tha

t we re fore se e a

ble from his dutie s a

nd a ppa re nt a uthority a s a n a ge nt of the B a

nk De fe nda

n ts. Lisa M . v. He nry M a

y o Ne wha ll M e m . Hosp., 48 C a l. R ptr. 2d 510, 512–15 (C a l. 1995); se e C a l . C iv. C ode § 2338.

6Pla intiffs’ a lle gations e sta blish tha t Va he di’ s a p pa re nt a uthority only e xte nde d to he lping thePla i ntiffs obta in loa ns, a nd a dvising them

a bout a fforda bility and re pa

ym e nt, disc losing risks, a nd a ssisting them

with filling out the a pplic a b le pa pe rwork. Nothing ple a de d by Pla intiffs pla

usibly sugge sts the B ank De fe nda

nts should ha

v e fore se e n tha

t Va he di would use

KGV Inve stm e nts to obta in Pla intiffs’ m one y , borrowe d or not.

While we re c ogniz e a

princ ipa l m ay

be lia b le unde r § 1964 for a c t s of its a ge nt tha t viola te d § 1962, B ra d

y v. Da iry Fre sh Produc ts C o ., 974 F.2d 1149, 1154–55 (9th C ir. 1992), tha t is only true whe re the a ge n t wa s a c ting in the inte re st of the princ ipa l, a s oppose d to e nga ging in ra c ke te e ring a c tivitie s tha t ha rm the princ ipa l ’ s inte re st. Oki Se m i c onduc tor C o. v. W e lls Fa rgo B a nk, Nat’ l Ass’ n, 298 F.3d 768, 775 (9th C ir. 2002). Pla intiffs’ own e vide nc e shows Va he di wa s a c ting a ga inst theB a

nk De fe nda

nts’ inte re sts. Pla i ntiffs a tta c he d re c ords from

Va he di’ s c rim ina l c onvic tion for de frauding fina n c ia l institutions. His plea a gre e m e nt a dm its to de frauding theB ank De fe nda nts by subm itting loa

n a p plic at ions listing fa lse a s se ts, inc o m e , a

nd oc c u pations. Va

he di ha s a dm itte d tha

t he wa s de fra

uding the B ank De fe nda

nts.

7To the e xte nt tha t Pla intiffs sugge st tha

t the y ha d distinc t m ortga g e fra ud injurie s ste m

m ing from

Va he di’ s sc h e m e , the distric t c ourt provide d am p le opportunity

for Pla i ntiffs to e xpla in wha t ha d pre ve nte d the m

from be c om ing aware of the se injurie s at the tim e the loa n a pplic ations we re file d a

nd Pla intiffs did not provideany

e xpla nat ion. The re fore , the distric t c o urt prope rly

found tha

t R IC O’ s four-y e ar statute of lim ita tions ha d run on a

ny c la im s ste m

m ing dire c tly from the m ortga g e fra

ud. Se e Pinc ay

v. Andre ws, 238 F.3d 1106, 1108–10 (9th C ir. 2001).

Pla intiffs a lso fa ile d to a de quate ly ple a d fa c ts supporting the ba sic e le m e nts of e a c h of the four R IC O c a use s of a c tion the y

a lle ge , a nd dismissa l of the ir c la im s wa s a ppropria te . Se c tion 1962(a

) provide s tha

t it is unla wful “ for any

pe rson who ha s re c e ive d a

ny inc om e de rive d, dire c tly

or indire c tly , from

a patte rn of ra c ke t e e ring a c tivity . . . to use or inve st . . . a ny pa rt of suc h inc om e . . . in . . . opera tion of . . . any e nte rprise .” 18 U.S.C . § 1962(a ). To susta in the ir c la im for a viola tion of § 1962(a ), Pla intiffs ne e d to a l le ge fa c ts te nding to show the y we re injure d by

“ the use or inve stm e nt of ra c ke te e ring inc om e ,” Nugge t Hy droe le c tric , L.P. v. Pa c . Ga s 8and Ele c . C o., 981 F.2d 429, 437 (9th C ir. 1992), a s oppose d to the ra c ke te e ring

a c tivity itse lf. Though Plaintiffs ple a de d the y we re ha rm e d by Va he di’ s inve stm e nt of the i r m one y into va rious busine sse s within his sche m e ,

“ [r] e i nve stm e nt of proc e e ds from a lle ge d ra c ke te e ring a c tivity ba c k into the e nte rprise to c ontinue its ra c ke t e e ring a c tivity is insuffic i e nt to show proxim ate c a usation.” Sy

be rsound R e c ords, Inc . v. UAV C orp., 517 F.3d 1137, 1149 (9th C ir. 2008). M ore ove r, nothing ple a de d sugge sts C ountry wide inve ste d

any ra c k e te e ring proc e e d s. Se c tion 1962(b) prohibits the use of im prope r m e ans to a c quire or m a inta in c ontrol ove r an inte re st in a n e n te rprise e nga ge d in inte rstate c om m e rc e . 18 U.S.C . § 1962(b). Pla i ntiffs do not ple a d tha t the B ank De fe n da

nts a c quire d

or m a inta ine d suc h an e nte rprise . Pla intiffs be ing tric k e d into giving the ir m one y to Va he di wa s his, not the

B ank De fe nda

nts’ , im prope r m e ans. Though Plaintiffs a lle ge d ge ne ra lly tha t the B ank De fe nda

nts ga i ne d c ontrol of thea lle ge d R IC O e nte rprise , the y ple a de d no fa c t s to pla

usibly support this c la im , or e xpla in how the B ank De fe nda nts ga ine d suc h c ontrol through ra c ke te e ring a c tivity , or how Pla intiffs suffe re d a distinc t injury

from the B ank De fe nda

n ts’ purporte d c ontrol of the e nte rprise . 9Se c tion 1962(c ) prohibits a pe rson e m

ploy e d by or a s soc iate d with a

ny e nte rprise e nga ge d in inte rstat e c om m e rc e to c onduc t or pa

rtic ipate in the c onduc t of the e nte rprise through a patte rn of ra c ke te e ring a c t ivity . 18 U.S.C . § 1962(c ). To sta te a c la im for a viola

tion of § 1962(c ), Pla intiffs m ust ple a d tha t the B ank De fe nda nts pa rtic i pate d in (1) the c onduc t of (2) a n e nte rprise tha

t a ffe c te d inte rstate c o m

m e rc e (3) through a

patte rn (4) of ra c ke te e ring a c tivity or c olle c tion of unla wful de b t , a

nd the c onduc t m

ust ha ve be e n (5) the proxim ate c a use of ha rm to the vic tim . Ec le c tic Props., 751 F.3d a t 997. W ith re spe c t to theproxim ate c a use e le m e n t, we have se t forth thre e non-e x ha ustive fa c tors to c onside r: (1) whe the r the re are m ore dire c t vic tim s of the a lle ge d wrongful c onduc t who c an be c ounte d on to vindic ate the la w a s priva

t e attorne y s ge ne ra l; (2) whe the r it will bediffic ult to a sc e rta in the am ount of thepla intiff’ s da m a ge s attributa

ble to de fe nda

nt’ s wrongful c onduc t; a

nd (3) whe the r the c ourts will ha ve to a dopt c om

plic at e d rule s a pportioning da

m a ge s to obvia

te the risk of m

ultiple re c ove rie s. M e n doz a v. Zirkle Fruit C o., 301 F.3d 1163, 1168–69 (9th C ir. 2002) (quota tions and c ita tion omitte d ). “ Wh e n a

c ourt e v a luate s a

R IC O c la i m

for proxim ate c a usation, thec e ntra l que stion it m ust a sk is whe t

he r the a lle ge d viola

tion le d dire c tly to pla intiff's injurie s.” Anz a , 547 U.S. a t 461.

10The am e nde d c om pla int re fle c ts tha

t Pla i ntiffs’ injurie s we re c a use d by the trust the y pla c e d in Va

h e di a nd the m one y

the y loa ne d to him

on the ba sis of his prom ise s . The a lle ge d m a i l a nd wire fra

ud c o m m itte d by the B ank De fe nda

nts, whic h indic ate d to pote ntia l borrowe rs tha t KGV Inve s tm e nts wa s a re puta ble m ortga ge broke r that C ountry wide Hom e Loa

ns pa rtne re d with, c ould ha

v e influe n c e d som e of the Pla intiffs to ta ke out loa ns on the ir hom e s the y

c ould not a fford. B ut the ple a dings do not pla usibly sugge st this ne c e ssa

rily le d to the ir de c ision to trust Va

h e di with the ir m one y . Tha t point is ma de c le ar by

the fa c t tha

t m one y inve ste d an d

lost by m ost, thirte e n of the se ve nte e n Pla intiffs vic tim iz e d by Vahe di’ s Ponz i sc he m e , did not e ve n c om e from loa n s funde d by

the B ank De fe nda nts.

Se c tion 1962(d) make s it unla wful to c onspire to viola

te any of the othe r thre e subse c tions of § 1962. 18 U.S.C . § 1962(d). To sta te suc h a c la im , the ple a dings m

ust sugge st the B ank De fe nda nts we re “ aware of the e sse ntia l na ture and sc o pe of the e nte rprise a nd inte nde d to pa

rtic ipate in it.” B a

um e r v. Pa c hl, 8 F.3d 1341, 1346 (9th C ir. 1993) (inte rna l quota tion m arks a

nd c ita tion omi tte d). Though Pla intiffs ple a de d tha t the B a nk De fe n da

nts we re pa

rt of Va he di’ s e nte rprise and ha d

ge ne ra l knowle dge a

bout its purpose , none of the ir a lle gations 11pla

u sibly sugge st the B ank

De fe nda nts ha d a ny knowle dge of Va

h e di’ s Ponz i sc he m e or its sc o pe , or tha t the y a gre e d a nd inte nde d to pa

rtic i pate in it. Thefa c ts ple a de d we re insuffic ie nt to infe r a c onspira c y

e xiste d with theB ank De fe nda

nts, and the distric t c ourt prope rly dism isse d this c la i m . Se e B a um e r, 8 F.3d a

t 1346–47; se e a lso Howa

rd v. Am . Online Inc ., 208 F.3d 741, 751 (9th C ir. 2000) (“ Pla intiffs c annot c la im

tha t a c onspira c y

to viola te R IC O e xiste d if the y

do not a de quate ly

ple a d a substa ntive viola

t ion of R IC O.” )

Whe the r to gra

nt le a ve to a m e nd is in the

disc re tion of thedistric t

c ourt. Fom an v. Da v i s, 371 U.S. 178, 182 (1962). W he n re vie wing the distric t c ourt’ s de c ision, we look “ to whe the r the tria l c ourt ide ntifie d a nd a pplie d the c orre c t le ga l rule . . . [a

nd] we look to whe the r the tria l c ourt’ s re solution . . . re s ulte d from a fa c t ua l finding tha

t wa s illogic a l, im

pla u sible , or without support in infe re nc e s tha t m ay be drawn from the fa c ts in there c ord.” Unite d State s v. Hinkson, 585 F.3d 1247, 1263 (9th C ir. 2009) (e n ba nc ). The distric t c ourt re a sona bly c onc l ude d tha

t Pla i ntiffs’ “ bloa

te d” am e nde d c om

pla int, whic h c o nta ine d se ve nty m ore pa ge s tha

n the o rigina l 180 pa ge c om pla int, fa i le d to re m e dy

the ple a ding de fic ie nc ie s ide n tifie d in the origina l c o m pla int, a nd a m e ndm e nt would befutile . It wa s re a s ona ble for the c ourt to de t e rm ine tha t Pla intiffs’ 253 pa ge am e nde d c om pla int 12c onta ine d a ll the re l e va nt a lle gations Pla intiffs c ould m ake . Eve n a fte r be ing a dvise d of the de fic ie nc ie s , Pla intiffs still fa ile d to a d e q

uate ly ple a d tha t the a c ts of the B ank De fe nda

nts proxim ate ly

c a use d the ir losse s from

Va he di’ s Ponz i sc he m e . Se e Unite d B hd. of C arpe nte rs & Joine rs of Am . v. B ldg. & C onst. Tra de s De p’ t, AFL-C IO, 770 F.3d 834, 845 (9th C ir. 2014). The distric t c ourt did not a b use its disc re tion in de ny i ng le ave to a m e nd. Id. AFFIRM E D .

13